Chinese Diplomacy in the Kingdom of Saudi Arabia: Implications for U.S. Defense Contractors in the Middle East and Beyond

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by Matt Keegan, Vincent Mariano & Alex Barker

Revitalizing Silk Road Relationships

On March 16, 2017, Saudi Arabia’s King Salman visited China’s President Xi Jinping and came out with approximately $65 billion in memorandums of understanding and letters of intent. This comes as part of the monarch’s grand tour of Asia to strengthen ties with the region and hedge against trade and military dependence on the United States. Oil and gas related investments underpinned the deals, but cooperation was the overarching theme of the day. It is easy to imagine that the meeting was an innocuous get-together of major world players. However, given current arms trade restrictions between the U.S. and the KSA, the country’s history of significant arms deals with China, and The Kingdom’s continued purchase of sophisticated Chinese defense systems, Salman and Xi’s meeting points towards a more significant trend with larger implications for the American defense industry. If U.S. vendors do not acknowledge the influx of Chinese products in the KSA (the United States’ top importer at 10% of all American arms sales), they may be surprised to find their market share in the purse of the PRC. Furthermore, if U.S. trade regulations maintain their staunch objection to sales of cutting-edge weapons systems to non-western allies, American vendors can expect the encroachment of Chinese hardware beyond the KSA in the long term.

Sino-Saudi cooperation may seem peculiar given each country’s diplomatic and military stances concerning the conflict in Syria and relationships with Iran – essentially, China supports Bashar al-Assad and Iran, while the KSA would like nothing more than to topple those two regional players. Nevertheless, security ties between Saudi Arabia and China have gradually increased in the past few years. The two countries reached the pinnacle of their relationship in 2016 when President Xi’s special envoy, Meng Jiangzhu, visited King Salman in Riyadh and the two sides birthed a five-year plan for security cooperation. The arrangement included joint military drills and counterterrorism efforts targeted towards China’s ISIS-related Uighur group.